TURLOCK -- Assistant City Manager John French is on paid leave after sending a memo to city officials regarding a possible misuse of federal funds in the city's housing services department.
French said he reviewed the 2008-2009 budget and became concerned the city may be spending too much federal grant money on administrative overhead, such as salaries, rents and utilities. The Bee reached French at his house on Friday.
The U.S. Department of Housing and Urban Development has a 20 percent cap on how much of its grant money can be spent on such costs.
"I thought, this doesn't look right," French said.
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French has been responsible for the day-to-day operation of Turlock's housing services department since June 2007, interim City Manager and Police Chief Gary Hampton said. Hampton confirmed French is on leave but said he could not elaborate because it is a personnel matter.
Hampton said he wants to stay ahead of an annual HUD audit by launching his own evaluation of the housing department and its practices.
"I'm going to find out on my own," Hampton said, noting the inquiry should be completed in less than two weeks. "I don't need the federal government to tell me we aren't in compliance ... We will report it to HUD ourselves."
Hampton said there is currently no criminal investigation under way.
"I don't believe any member of this city (staff) would skirt or intentionally violate the use of federal funds," Hampton said.
French's memo laid out potential problems with spending in the 2008-2009 budget. He said it was important to straighten out the issue before a new budget is adopted for 2009-10, beginning July 1.
"There are some questions," French said. "But there's really no conclusion yet."
HUD is also reviewing a citizen complaint about the repayment of federal grant money used for the city's now-shuttered homeless shelter.
Grant Davis, who hopes to re-open the B Street shelter, wants to know where the federal grant money is now that the homeless shelter is closed.
Turlock is required to pay back the appraised value of the old shelter into a city fund for similar projects, such as transitional or senior housing.
The appraisal for the site ranged from $100,000 for the land alone to $300,000 when including the warehouse, but a second audit is under way.
Bee staff writer Merrill Balassone can be reached at email@example.com or 578-2337.